Why Kenyans are yet to fully reap from wind power project

Kenyans will have to wait longer for electricity bills to go down further despite the euphoria following the commissioning of Lake Turkana Wind Power (LTWP) farm in Marsabit County.

The company reported that it had injected 71.3 million Kilowatt watt Hours (KwH) into the national grid last month amid high hopes that the alternative source of renewable energy would significantly reduce reliance on expensive thermal (diesel-run generators) power.

These expectations are supported by the fact that Kenya Power buys wind-generated energy from LTWP at estimated 34 per cent cheaper compared to the other electricity producers. LTWP sells electricity to Kenya Power at 7.52 euro cents (Sh8.70) per Kwh.

Following connection of LTWP to the national grid, Kenya’s energy generation mix significantly changed with wind-generated power increasing from a mere 1.09 per cent in February to 7.8 per cent in October.

Geothermal power increased to 44.6 per cent by October from 27.94 per cent in February, while hydro rose to 37.7 per cent from 35.26 per cent. Thermal energy reduced to nine per cent from 30.71 per cent while gas and solar energy still remain negligible. The country imported about 0.9 per cent of power from Uganda in October.

As it currently stands, therefore, the 640 million euros (Sh74 billion) LTWP has an installed capacity of about 17 per cent of Kenya’s overall installed capacity, which means that from the estimates from ERC, another nine per cent of the capacity has not been fully utilised yet.

Full capacity

When the wind farm, which is expected to provide 310MW, eventually releases the whole capacity to the national grid, maybe then, mwananchi might reap from the 7.52 euro cents (Sh8.70) fixed price in the 20-year power purchase agreement (PPA) period.

Energy Regulatory Commission (ERC) director general Parvel Oimeke says the wind power helped the country reduce uptake of thermal energy from about 16 per cent to the current nine per cent.

“You realise that hydros have gone down. We were doing 43 per cent in September and now we are at 37 per cent. We have still maintained the same fuel cost charges (fcc) at Sh2.50, therefore, were it not for the wind the cost of electricity would have gone up even further,” he said.

But LTWP director Rizwan Fazal warns that unfortunately, unlike the thermal which can generate constant electricity to the national grid, wind power is a bit erratic. Wind-powered turbines depend on wind which cannot guarantee consistent flow throughout the year.

Maintaining a constant flow will still depend on the weather and state of turbines in the next 20 years according to the PPA.

The taxpayer will also have to foot the bill of a delayed contractual agreement with LTWP who were to be paid 127 million euros (Sh14.6 billion) for logistics that made Ketraco delay setting up the line currently evacuating power from the shores of Lake Turkana up to a Suswa sub station, before joining the national grid.

Transmission charges

According to the PPA, it, therefore, meant that a delay in the transmission between May 15, 2017 and May 31, 2018 was to be paid by the taxpayer as delayed transmission charges.

LTWP director Rizwan Fazal says further consultation led to an agreement that instead of LTWP getting paid by the government the full 127 million euros (Sh14.6 billion) as delayed transmission charges, they would receive 46 million euros for starters.

However, they will further defer collection of the balance of 81 million euros (Sh9.36 billion) over a period of six years, on account of a minor tariff increase to KP in future.

It is expected that once the 20-year PPA ends, expectations are that the turbines will still be efficient for the government and LTWP to sit down for a cheaper agreement which will be passed on to consumers.

According to one of the founding fathers of the project, Carlo van Wageningen, LTWP will look at possibilities of using new technology after the end of their 20-year PPA.

Basically, the investors would have broken even and got a fair share of their returns in the first 10 years.

“We might also decide to change the PPA and renegotiate it to increase the PPA from 300MW to say 600MW,” he said.